Covid-19 and the resulting quarantine/stay in place orders have us all reeling.
Economists are predicting that America could see the unemployment rate jumping to 30%, topping that of the Great Depression at 24.9%. About 47 million people could lose their jobs because of the crisis.
To help mitigate the damage, the government is providing emergency loan help to small businesses. Let’s take a look.
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. This marks the largest-ever economic bill in U.S. history.
The aim of the $2.2 trillion dollar bill is to bolster the U.S. economy. It will do this by expanding unemployment benefits to groups who normally wouldn’t qualify, like self-employed individuals and independent contractors.
It also provides a $349 billion lending program for small businesses in an effort to help businesses keep paying their employees during the crisis. It is called the Paycheck Protection Program (PPP).
Highlights of the Paycheck Protection Program
Loans under the PPP are available to businesses with 500 employees or less. They must provide a good faith certification stating they need the loan because of financial uncertainties due to COVID-19.
There are no borrower or lender fees for these loans and the interest rate is capped at 0.5%. Borrowers will not have to provide collateral or a personal guarantee to qualify. Both principal and interest payments can be deferred for 6 months to 1 year.
Before the change, the government-backed 75% of loans over $150,000 and 85% of loans less than $150,000. Until December 31, 2020, the government will now back 100% of the amount. Additionally, these disaster loans are forgivable up to 100% of the amount, provided the business meets eligibility requirements.
Loans can be used for payroll costs, rent, utilities, and to cover the interest on mortgages or other debt acquired before February 15, 2020. Amount eligibility will be determined based on 2.5 times the business’ average monthly payroll costs from 2019 and capped at $10 million.
Apply for a loan with any SBA-approved lender. Due to the crisis, lenders will not have to wait for SBA government approval, facilitating the funding of loans a bit quicker.
Guidance for Small Business Owners Seeking Emergency Loan Help
The hope is that this stimulus package will help keep food on the table for the average American and keep as many small businesses in business as possible. Since this is new to everyone, and we couldn’t cover everything about the emergency loan help being offered in complete detail in this article, feel free to reach out to us here at CapFront for guidance.
We’ve been working harder than ever to do our part to support small businesses and provide funding during this crisis. And all of our primary lending partners are right here in the trenches with us.
If you need to seek business capital while waiting for your SBA loan approval, don’t hesitate to reach out! We’ve always specialized in offering loans that fund quickly and we know that it’s even more important right now. Some of our lending partners can even fund a loan on the same day.
Contact us today to find out how we can help!